Bankruptcy

Bankruptcy

People just like you file bankruptcy for any number of reasons. They have become overwhelmed with credit card debt. They lost their job and got behind on their bills. They were injured and piled up a lot of medical bills. The reasons go on and on. But what matters is getting out of the debt and getting a fresh financial start.

Bankruptcy is a very powerful tool that can help someone with any number of different debt issues. While there are certainly downsides to filing for chapter 7 or chapter 13, it does not signal the end of your financial existence, and in fact can solve certain debt problems in ways that no other avenues can. Filing can help with past due mortgage payments, late car payments, repossessions (sometimes we can even get your car back!), credit cards, medical bills, child support arrears, and more.

What’s the difference?

Chapter 7 bankruptcy is ideal for individuals whose main concern is their unsecured debt, such as unsecured credit cards and other common bills. Though not guaranteed, it is often possible to keep your home and vehicle in a chapter 7 as long as your payments are current. At the end of the chapter 7, your debt will either be paid off, discharged (it disappears), or both. The entire process generally takes four to six months to complete.

Chapter 13 bankruptcy is ideal for individuals who may be behind on their vehicle payments or house payments. Chapter 13 is a repayment plan than can often pay off the vehicle, pay off mortgage arrears, and pay off or discharge other debt through a monthly payment to a bankruptcy Trustee. Based on a number of factors, this monthly payment amount is sometimes lower than a client’s current car payment giving the client a little more breathing room each month. The entire process generally takes three to five years to complete.

There are other types, such as chapter 9 (for municipalities), chapter 11 (for businesses or individuals with debt amounts exceeding the limits for chapter 13), and chapter 12 (for family farmers or fishermen). We don’t handle these types of cases, but rather focus on the types that help consumers like you.

What’s the drawback?

Your credit report will stink. But chances are, if you are looking for debt relief, you’re not too happy with your credit score anyway. Filing for chapter 7 or chapter 13 won’t make it any prettier, at least not at first. Once your case is complete, there will be a notation on your credit report for 7 to 10 years stating that you filed. This will make it more difficult to get credit in the future. You might have to pay higher interest rates and go to a lender that specializes in damaged credit.

Also, when you are going through the process, you can’t get any new debt without court permission. This means no more credit cards, no more loans, no new cars (although often the court will let you get a replacement vehicle if there is a real need). And the process can last from a few months up to five years.

There are some other drawbacks that we can talk about if they apply to you.

Is it worth it?

I generally think so; that’s why I am in the business of helping people file. I know it can bring much needed relief to people in bad situations. Ultimately, however, it’s up to you to decide. Instead of taking this generalized information, let someone from our firm look at your specific situation and help you make that decision. We can look closely at the ins and outs of all your debt and make sure all your questions are answered before you ever have to commit to anything or pay any money. And, as always, we don’t charge for consultations, so you can spend time with one of our handsome attorneys for free!